An agent selling insurance products to customers. Photographer: Brendon Thorne/Bloomberg.

In Charts: How Listed Life Insurers Performed In Q3 FY19

The three listed life insurers—ICICI Prudential Life Insurance Company Ltd., HDFC Standard Life Insurance Company Ltd. and SBI Life Insurance Company Ltd.—released their earnings for the December-ended quarter. Here’s a snapshot of their performance:

New Business Premium

New business premium, a sum of first-year premium and single-premium policies, reflects sales from new policies booked during a period. While all the three life insurers showed growth in their premium, ICICI Life grew the least at 10.4 percent.

Value Of New Business

In the life insurance sector, value of new business indicates profitability. The figure is calculated using actuarial assumptions to reflect the present value of future profits from new business written during a period. Life insurers, typically, disclose this number for April-December period in their third quarter results. ICICI Prudential had the lowest value of new business growth compared with its listed peers.

New Business Margin

New business margin indicates profit margin from new business written during a period. This number is also disclosed for April-December period by life insurers. ICICI Prudential was the worst performer on this count, too.

Persistency

Life insurance policies are long-term investments and require companies to retain their customers for the policy term. It's important for insurers to perform well on this metric. Apart from SBI Life, persistency fell for both ICICI Prudential and HDFC Life for the 13th month.

Investment Income

The cost of running a life insurance business is derived from an insurer’s investment and underwriting activities.

Due to market volatility, companies with a higher exposure to unit-linked policies have seen their investment income decline. Unit-linked policies integrate insurance and investment, and customers have the choice to invest a portion of their premium in instruments such as stocks, bonds or mutual funds.

ICICI Prudential, which received 81 percent of its new business annualised premium from unit-linked policies, showed an 84 percent decline in their investment income, the highest among its listed peers.

The loss in investment income under unit-linked policies, however, is matched with market value change in policyholders’ linked liabilities in the balance sheet, and therefore, loss in investment income does not affect the insurer’s profits.

Solvency Ratio

Solvency ratio indicates a company’s ability to meet its long-term financial obligations. A higher solvency ratio indicates that the insurance company will fare better if all the liabilities and claims are due at the same time. In India, a company must maintain its solvency ratio above the regulatory requirement of 1.5.

Among the listed life insurers, ICICI Prudential was the only one that showed a decline in solvency ratio.

Market Share

A company’s market share determines its command over the market’s total premium. One way to calculate it is through the new business premium collected from policies sold to individuals. For ICICI Prudential, which received 95 percent of its premium from retail business, market share fell nearly 460 basis points in April-December period, compared with the corresponding period a year ago—the highest decline among its listed peers. (One basis point equals one-hundredth of a percentage point.)